You asked for a discussion of the Department of Public Utility Control's (DPUC) jurisdiction over electric companies in the state, how this jurisdiction was affected by the partial deregulation of the electric industry under PA 98-28, and how DPUC's jurisdiction compares to utility regulators in other northeastern states

SUMMARY

The law gives DPUC broad jurisdiction over electric companies and other investor-owned utilities. In addition to its general powers, DPUC regulates the rates electric companies charge, although its ability to regulate the rates charged for power itself is limited. DPUC also administers consumer protection and other relevant laws.

The deregulation law effectively required the electric companies to sell their power plants. The plants were sold to companies under the jurisdiction of the Federal Energy Regulatory Commission (FERC) rather than the DPUC. The legislation thus eliminated DPUC's ability to regulate the price of the power produced by these plants. More generally, it limited DPUC's ability to regulate the rates charged for the power delivered to electric company customers. Subsequent legislation may expand DPUC's ability to regulate these rates. The deregulation law did not affect DPUC's jurisdiction over the companies' transmission and distribution functions.

The utility regulatory commissions across the northeast have broadly similar powers. However, the commissions in states that did not deregulate (e. g. , Vermont) or did not require their utilities to sell off their plants (e. g. , New Hampshire) retained a greater ability to regulate the price of power. In addition, in a few states the commissions have jurisdiction over the siting of electric facilities, which in Connecticut falls under the jurisdiction of the Siting Council, a separate agency.

DPUC JURISDICTION OVER ELECTRIC COMPANIES

General Powers

CGS § 16-41 authorizes DPUC to issue orders to electric companies and other entities in its jurisdiction and impose civil penalties to enforce them. (Several other sections give DPUC authority to impose civil penalties with regard to specific statutes. ) CGS § 16-8 authorizes the department to examine witnesses under oath and demand the production of papers. CGS § 16-7 grants the department a right to enter property owned by an electric company or other utility at any reasonable time. CGS § 16-8c allows the department to audit the relationships between utilities and their holding companies. CGS § 16-8 authorizes the department to conduct management audits, and requires that such audits be conducted for large electric and gas utilities every six years. The costs of such audits are borne by the company.

Under CGS § 16-43 utility mergers require DPUC approval, as do sales of essential parts of a utility's physical plant and their issuance of bonds. (Additional DPUC approvals are required for land sales under § 16-50. ) CGS § 16-47 requires DPUC approval to form a utility holding company or to change who controls such holding companies.

Rate Regulation

Historically, utilities were viewed as monopolies. While competition has been authorized in electricity and several other industries regulated by DPUC, DPUC continues to regulate the rates of services that are not subject to competition, such as electricity distribution. As described below, it has a more limited ability to regulate the price of power itself. The power itself accounts for about 60% of an average residential customer's monthly bill. The remainder of the bill is transmission and delivery charges, charges imposed under federal and state law, and the monthly customer service charge.

The primary statute governing rate regulation is CGS § 16-19. This section bars utilities from charging rates above DPUC-approved levels and establishes the procedures DPUC must follow in setting rates. CGS § 16-19e establishes the principals of ratemaking. The central principal is that rates must be just sufficient to allow utilities to cover their operating and capital costs, attract needed capital, and maintain their financial integrity while protecting the public interest. Other statutes cover the treatment of specific types of costs. For example, CGS § 16-19d generally bars the recovery from ratepayers of the costs of electric company promotional advertising. In addition, DPUC must review electric company rates within four years after the company's last rate case to determine whether they are just and reasonable (CGS § 16-19a).

Consumer Protection and Related Laws

Title 16 gives DPUC jurisdiction over a wide range of consumer protection provisions. These include restrictions on utility terminations, prohibitions against slamming (changing a consumer's electric supplier without his consent), and billing standards. § 16-8a requires DPUC to investigate whistleblowing complaints from employees of utilities and other companies in the electric industry. It allows DPUC to issue corrective orders and impose civil penalties on companies who retaliate against whistleblowers. § 16-11 allows DPUC to order utilities to improve as needed to protect employee and public safety.

IMPACT OF DEREGULATION ON DPUC'S OVERSIGHT

PA 98-28 effectively required the electric companies to sell their power plants and other generation assets. The entities that bought these assets are under the jurisdiction of FERC, rather than DPUC. As a result, DPUC cannot regulate the price charged for the power produced by these plants. Instead the price is set by the regional wholesale market, and is not necessary related to the cost of producing the power.

In addition, DPUC cannot regulate when the plants operate or order their owners to build additional generating capacity. Because DPUC does not have jurisdiction over the plants, it cannot order their owners to defer recovering costs associated with them, as it occasionally did when they were owned by the electric companies.

The law does require DPUC to review and approve the process by which the electric companies procure power for their customers. However, since the companies are buying this power on the wholesale market, DPUC cannot regulate the price of the power. PA 07-242 substantially changes this procurement process. PA 07-242 also allows the electric companies to build new power plants under certain conditions. If and when they do, DPUC will be able to regulate the rates charged for the power produced by the companies' plants.

PA 98-28 imposed a number of other requirements on electric companies and requires DPUC to enforce them. For example, CGS § 16-245m requires the companies to implement cost-effective conservation programs and CGS § 16-245a requires them to obtain part of their power from renewable resources. PA 98-28 also required DPUC to adopt regulations governing the interactions between the electric companies and their generation affiliates, however the one generation affiliate that was created (Select Energy) subsequently went out of business.

The deregulation law did not affect DPUC's jurisdiction over the distribution of power to consumers. CGS § 16-244i specifically requires DPUC to continue regulating power distribution in a way maintains public safety and electric reliability.

ELECTRIC COMPANY REGULATION IN OTHER STATES

The utility regulatory commissions across the northeast have broadly similar powers. However, the commissions in states that did not deregulate their electric industries (e. g. , Vermont) or did not require their utilities to sell off their plants (e. g. , New Hampshire) retained a greater ability to regulate the price of power. For example, the primary electric company in New Hampshire (Public Service of New Hampshire) uses its own plants to generate about two-thirds of the power that its customers use. The New Hampshire Public Utility Commission regulates the company as a vertically integrated utility, setting the rates the company can charge for the power it generates, as well as its distribution rates. Other northeastern states that allowed their electric companies to retain their generation assets include New Jersey and Pennsylvania.

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